Islamic bond market to hit $200bn

The Islamic bond market will hit $200 billion by 2010, and is predicted to grow by up to 35% this year, ratings agency Moody’s Investor Service said in a report on Tuesday.

UAE banking outlook negative – Moody’s

Moody’s said growth in the market was being driven by the Gulf’s oil wealth and sovereign debt sales, reported UAE daily Emirates Business 24-7.

Faisal Hijazi, author of the report, said the Islamic finance market has experienced annual growth of 15% for the past three years, with Islamic bonds, or sukuk, the fastest growing market segment.

“This year, overall sukuk issuance should continue to increase by approximately 30% to 35% per annum. Sovereign sukuk is likely to gain popularity, with new issuance of sukuk out of Japan, Thailand and the UK,” Hijazi said.

About $97 billion of sukuk have been sold to date, the report said, without specifying how much of that debt has matured.

Moody’s said a total of 50 sukuk transactions came to the market from the Gulf last year, with 28 in Bahrain, 12 in the UAE, five in Saudi Arabia, four in Kuwait and one in Qatar, exceeding $19 billion in issuance.

Three UAE sukuk, amounting to more than $1 billion each, were issued by JSL, DP World Sukuk and Dubai Investments.

The ratings agency said the UAE Islamic finance market experienced a record year of growth in sukuk transactions, with 12 transactions coming to the market last year compared to seven in 2006. Volume issuance of UAE sukuk rose by nearly 27% to reach $11.1 billion.

Islamic finance is estimated to be worth around $700 billion globally. At the end of 2007, global volumes had reached $97.3 billion, with the majority coming from Malaysia and the Gulf.